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Triple Paycheck Month 2023 + California Tax Delay
For Meta and Google employees, March is one of the best months to accelerate your savings and investment goals!
Triple Paycheck Month!
Before we dive into Triple Paycheck Month, I wanted to cover a really interesting development that could earn you a few hundred extra dollars by waiting to pay your taxes.
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California Residents May Have Until October 16th to File Taxes
Both the IRS and the California Tax Franchise Board have announced that they will allow nearly all California residents (44 of the 58 counties, including the entire SF Bay Area) to delay filing their taxes until October 16th!
With interest rates in my WealthFront account currently at 4.55%, and 6 month Treasury Bills just shy of 5%, there could be an arbitrate opportunity for anyone looking at a large tax bill.
For every $10k you owe in taxes, 6 months of interest at 5% will earn you $250 (before taxes). T-Bills are exempt from State Taxes and could be an attractive option (Financial Samurai post on how to buy T-Bills)
I am not a CPA and this news just came out this week. More updates could come. I would have your taxes ready to go and make a decision closer to mid-April as more guidance comes out.
What is Triple Paycheck Month?
It all comes back to the humble paycheck. The mechanics of how you are paid often get glossed over.
Most Common Pay Periods:
Weekly: 1 paycheck per week, typically Friday.
Bi-Weekly: Every 2 weeks on a specific day, ie Friday. 26 Pay Periods per year.
Semi-Monthly: Typically the 15th and last day of the month
Monthly: One check per month typically on either the 1st or last of the month
“The biweekly pay period is the most common, followed next by weekly, then semimonthly, then monthly. Certain pay periods tend to dominate in individual industries; an example being the use of weekly pay periods by 82.4 percent of construction establishments.”-BLS
Google & Meta employees are paid bi-weekly. Typically that results in receiving 2 paychecks per month. However, there are 52 weeks in a year, that results in 26 total pay periods each year. That means there are 2 months each year that have 3 paychecks.
In 2023 those magical months for Meta and Google are March and September! If you get paid bi-weekly but on the opposite schedule as Meta/Google your triple paycheck months would be June and December.
If you really want to plan ahead, 2024 Triple Paycheck Months are March and August.
This is different than Uber which always has 2 paychecks due to paying on the 15th and last day of the month (semi-monthly) as well as Amazon who pays a once per month (monthly).
There is no material difference in annual pay across the different pay schedules. The annual salary for each should be equivilent, just the split of how it is paid out is different. The one exception being the very rare years where there are 27 bi-weekly pay periods and your payroll department doesn’t make any adjustments. 2015 at Facebook was a magical year when we all received the fabled 27th paycheck, essentially giving everyone a 3.8% extra bonus.
So if it is all the same at the end of the year, why is this special?
We are creatures of habit. We quickly acclimate into what is “typical” and “expected”. We are used to getting paid 2 times per month since it happens 10 out of 12 months of the year. Even if you don’t strictly budget, you will feel like you are getting paid more on those triple paycheck months.
All your bills are monthly. Rent, car payments, utilities, internet, cell phone, tuition and pretty much every other recurring expense hits monthly. So if you have a fixed amount that you typically aim for saving each month, triple paycheck months present a unique opportunity to take advantage of your own psychology and instead of spending it all you can use it to save an invest!
My fellow Meta coworkers even have what could be considered quadruple paycheck month since annual bonuses will also be paid out in March.
This is why, if you have not started focusing on your financial goals, March is the best time to start.
This is why, if you have not started focusing on your financial goals, March is the best time to start. You can do it without feeling any of the impact, because you don’t need to change any of your spending habits!
You are fresh off an RSU vest in February, you are about to get 3 paychecks this month, your annual bonus is going to land, and if you just got promoted and are seeing a salary raise… you just won!
None of that is going to do you any good though if you just turn around and frivolously spend it.
Here is what I would do:
I just received my RSU refresher's for the year as well as any annual compensation changes. That means it is time to update my Total Compensation + RSU Dashboard. This is important to help me understand how much remaining income I have left.
I would look at my “Year to Date contributions” to my 401k to see if there are any optimizations. Since I am front loading my 401k contributions March should see me finish maximizing all my contributions. I am nearly maxed out on my Pre-Tax already ($22,500), so I shifted my contributions to my After-Tax. Between the 3 March paychecks and an annual bonus payout all 401k contributions should get maxed out and I can start actually getting paychecks again.
Use this renewed sense of financial responsibility to add more personal logging into your financial life. Adding in ways to measure your progress helps you better understand how the changes you are making fit your big picture. Having a single place to see my complete financial picture is incredibly important.
Empower, previously called Personal Capital, is by far my favorite free tool for tracking my overall net worth and investments. I regularly use it for monitoring my top level net worth, tracking asset allocations across all my investments, their savings planner, and they have one of the best sets of retirement projection tools available. If you want to take things even further you can see a full list of all the tools (many paid) which I personally use and recommend. Disclaimer: This newsletter may earn a commission from new sign ups.
This is all about accelerating your goals. That starts with taking a step back and identifying what your goals are. I am simply going through the 10 Steps and identifying whether there is an opportunity to achieve any of my goals sooner.
Give yourself permission to spend your hard earned money. If you are nailing the fundamentals, have a strong emergency fund, are on track to hit your saving/investment goals, this is a great month to look for opportunities to enjoy and spend some of that excess. Don’t forget that the “boring middle” on the journey to FIRE is your life.
Taking my own advice
In an effort to embrace “give yourself permission to spend” and the “Die With Zero” ethos I am intentionally trying to invest more in family experiences.
The concept of experiences paying dividends over time in the same way index fund investments would was something that really resonated with me.
So when my daughter had a “Ski Week” (we never had these in Texas!) I thought it would be the perfect way to build experiences together that we can look back on.
I was also wanting to see whether we liked this “winter” thing which would open up more potential relocation options.
I think I can safely eliminate winter wonderlands from potential cities to live in.
WealthFront’s default interest rate today is 4.05%. By signing up through my referral link there is a “Boost” of .5% for 3 months bringing the interest to 4.55%. This is where a substantial portion of my emergency fund currently sits.